Dropping Your Guard On The White House Lawn

When John Mack was almost lured into enough of a false sense of security (or perhaps a conspiracy) to nearly disclose his plans to raise new equity* and pay back TARP money by CNBC's Erin Burnett we thought it might be curtains for the guy. We are also not sure how he could have lived with himself after making such a slip it in front of Lloyd's of Goldman. Our Bess Levin was (virtually) there to capture the moment:

Burnett: Let's talk TARP...you've said you want to return it after the stress test, as early as April...do you still want to do that? Blankfein: We didn't say shit. TARP has never been permanent capital...we will return it, at some point, with interest. Burnett: How 'bout you, Stanley? Mack: We're in the same position...we can pay it back...we'll do it if our regulator wants us to. Burnett: Okay, more about TARP. If you give the money back, and something catastrophic happens again, and you need the money will you-- Mack: Erin, stop. This was not what the meeting was about. We talked about what are we going to do, how are we going to do it, what are the issues. Burnett: Your stock is high again...are you going to raise equity? Blankfein: We'll be talking to our regulators. Mack: I need to talk to my board first. As much as I like CNBC, I'm really not going to go there.

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Yes, yes. Everything is fine. And how dare you ask that question, you little minx. You'll never work in this town again! (Phew, that was close). Oh, wait:

Morgan Stanley Chief Executive Officer John J. Mack, who will run the largest broker-dealer when the acquisition of Smith Barney from Citigroup Inc. is completed later this year, told employees in a nationwide conference call yesterday that 2009 will be "a difficult year," mostly because of so many toxic debts that have yet to be cleansed from the bank's holdings. Among the 529 financial institutions that received loans from American taxpayers, according to data compiled by Bloomberg, Morgan Stanley isn't yet prepared to pay back the $10 billion it received from the U.S. Treasury in October.

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Earlier: Coffee Klatsch With Mack and BlankfeinMack Warns Morgan Stanley of 'Difficult Year' in 2009 [Bloomberg] * Not that there are now or will be any such plans or that such plans are or are not being considered or that said plans exist or could ever be said to have existed.